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July 16, 2011

The Green Economy Withers

Even after fudging numbers and ignoring the huge subsidies, a liberal think tank reports that growth in the alternative-energy sector lags the rest of the economy.

Green jobs were supposed to be our salvation, both for the earth and for the economy, according to the Obama administration. White House policy based on this flawed premise led to offshore and onshore drilling bans and the locking-up of energy-rich lands while huge alternative energy subsidies (aka "investments") found their way into the stimulus and other legislation.

As happens when government tries to pick winners and losers, the government lost — no, we all lost. As has happened in countries such as Spain, this misallocation of resources has succeeded only in stalling our economy as unemployment and debt grow.

In Spain's case, it was found that for every "green" job created, 2.2 jobs were lost in the rest of the economy.

Along comes the Brookings Institution with a report touting the fact that nearly 2.7 million people brought home paychecks in 2010 working in the "clean economy." That's a 3.4% increase in "green jobs" since 2003, and it sounds terrific until you realize the economy as a whole grew at a 4.2% rate over the same period.

As the folks at HotAir.com duly note, Brookings got to its conclusions by including, for example, all mass transit workers regardless of the actual energy source. They also lump in people such as organic farmers and nuclear energy workers, though the greenies have never touted nuclear energy as "clean" or nuclear jobs as "green."

Discounted is the role of government mandates and subsidies, without which the alternative energy sector would wither and die. A good many of these "green jobs" exist in the public sector of federal, state and local governments. And they come at huge expense.

A 2008 report by the Energy Department's Energy Information Administration reported that in 2007, while the average subsidy per megawatt hour for all energy sources was $1.65, the subsidy for wind and solar was about $24 per megawatt hour. On the nonelectricity generating side, ethanol received a subsidy of $5.72 per million British thermal unit.

Remember Solyndra Inc., the first recipient of $535 million of stimulus cash in 2009 to hire 1,000 workers for "green jobs"? The company had never shown a profit, and in the end the Fremont, Calif.-based solar panel manufacturer never came through.
A month after President Obama's visit, the company he praised withdrew its public offering plans. A few weeks later, congressional auditors announced that the Energy Department had given favorable treatment to some loan-guarantee applicants.

Coincidently, Solyndra's majority owner, billionaire George Kaiser, was a top fundraiser for the 2008 Obama-Biden campaign.

This is how we set energy policy. It is based not on the free market and supply and demand, but on ideology and crony capitalism. Energy prices then "necessarily skyrocket," causing job loss and consumer pain as money that might be spent to buy stuff goes just to keep the lights on.
As we have noted, the focus on green jobs comes at the expense of other jobs. An oil industry study says that 190,000 jobs could be created by 2013 if offshore development permits in the Gulf of Mexico were returned. Just finishing the Keystone XL pipeline to bring Canadian tar sands oil to Houston-area refineries could net hundreds of thousands of jobs.

Alternative energy cannot survive without mandates and subsidies, and cannot compete in the free market with proven and plentiful sources like petroleum.

The Brookings report may have been meant to tout the green economy, but it only serves to underscore its failure and the opportunity costs it imposes on the American people and economy.